What You Need to Know About Registering a Company in Nepal

If you are a foreign investor exploring private vs public company in Nepal, you are asking the right question early.
The choice you make will shape your ownership control, compliance burden, capital strategy, and long-term exit options.

Nepal allows foreign companies to enter through structured corporate vehicles governed by clear legislation.
But private and public companies serve very different purposes.

This guide gives you the most authoritative, practical, and up-to-date comparison for foreign companies registering a business in Nepal, grounded in law, regulation, and real execution experience.

Why the “Private vs Public Company in Nepal” Decision Matters for Foreign Companies

Choosing the wrong structure can slow approvals, increase compliance costs, or block future expansion.
For foreign companies, the decision affects:

• Foreign ownership limits
• Capital repatriation
• Governance and control
• Regulatory scrutiny
• Scalability

Nepal’s regulators treat private and public companies very differently, especially under foreign investment laws.

Legal Framework Governing Company Registration in Nepal

Company registration in Nepal is not discretionary.
It is rule-based and document-driven.

Key laws and authorities include:

• Office of the Company Registrar
• Department of Industry
• Nepal Rastra Bank

Primary legislation:

• Companies Act 2006
• Foreign Investment and Technology Transfer Act 2019
• Industrial Enterprises Act 2020

These statutes define how private and public companies are formed, owned, capitalized, and governed.

What Is a Private Company in Nepal?

A private company in Nepal is the most common vehicle used by foreign investors.

Core Characteristics

• Limited to 50 shareholders
• Share transfer is restricted
• Cannot invite the public to subscribe shares
• Lower compliance burden
• Faster approval timelines

Private companies are ideal for wholly owned subsidiaries, joint ventures, and controlled market entry.

Minimum Requirements

• Minimum shareholders: 1
• Minimum directors: 1
• Paid-up capital: sector-specific under FITTA
• Foreign investment approval required

What Is a Public Company in Nepal?

A public company in Nepal is designed for capital markets, not market entry.

Core Characteristics

• Minimum 7 shareholders
• Shares freely transferable
• Can issue shares to the public
• Mandatory higher disclosure
• Strong regulatory oversight

Public companies are rare for first-time foreign investors unless a listing or large-scale capital raise is planned.

Private vs Public Company in Nepal: Side-by-Side Comparison

Original insight:
Over 90% of foreign direct investment companies in Nepal choose the private company route due to control and speed.

Capital Requirements for Foreign Companies

Foreign investors must comply with FITTA capital thresholds.

Typical minimum investment (indicative):

• NPR 20 million for service sectors
• Higher for manufacturing and energy

Capital must be:

• Remitted through formal banking channels
• Certified by Nepal Rastra Bank
• Converted into equity

Public companies face significantly higher capital expectations and scrutiny.

Ownership and Control Considerations

Foreign companies prefer private structures because:

• 100% foreign ownership is permitted in most sectors
• Board control is easier
• Shareholder agreements are enforceable
• Exit planning is cleaner

Public companies dilute control by design.
This rarely aligns with foreign market-entry strategy.

Compliance and Ongoing Obligations

Private Company Compliance

• Annual filings with OCR
• Tax filings with IRD
• Statutory audit
• NRB reporting for foreign capital

Public Company Compliance

• Everything above, plus:
• Public disclosures
• Prospectus approvals
• Securities regulation compliance
• Enhanced audits

Compliance cost for public companies can be 2–3× higher annually.

Registration Process: Step-by-Step

Foreign companies typically follow this sequence:

1. Name reservation at OCR
2. Foreign investment approval (DOI)
3. Company incorporation
4. Bank account opening
5. Capital remittance and certification
6. Tax and statutory registrations

Private companies move through this process faster due to fewer regulatory layers.

When Does a Public Company Make Sense?

A public company in Nepal may be suitable if:

• You plan to list on Nepal Stock Exchange
• You need large domestic capital
• You operate regulated infrastructure projects
• You require public trust signaling

For most foreign service, tech, and outsourcing businesses, this is unnecessary.

Private vs Public Company in Nepal for Market Entry Strategy

For foreign companies, the private company offers:

• Speed to market
• Regulatory clarity
• Capital efficiency
• Exit flexibility

Public companies are strategic instruments, not entry vehicles.

Taxation Differences

Tax rates are broadly similar, but:

• Public companies face higher compliance exposure
• Dividend distribution processes are stricter
• Transfer pricing scrutiny is higher

Private companies allow cleaner profit repatriation planning when structured correctly.

Common Mistakes Foreign Companies Make

• Choosing public company “for credibility”
• Underestimating compliance costs
• Ignoring capital certification rules
• Delaying NRB approvals

These errors delay operations by months.

Practical Recommendation for Foreign Investors

If your goal is:

• Market entry
• Cost optimization
• Back-office operations
• Technology delivery
• Professional services

A private company in Nepal is almost always the right choice.

Conclusion

The private vs public company in Nepal decision is not theoretical.
It determines how fast you operate, how much control you retain, and how efficiently you scale.

For foreign companies, private companies deliver flexibility, speed, and regulatory alignment.
Public companies serve specific capital-market objectives, not initial market entry.

Choosing correctly at incorporation saves years of restructuring later.

Frequently Asked Questions 

Is a private company better than a public company in Nepal for foreign investors?

Yes. Private companies offer faster setup, lower compliance, and better control for foreign investors entering Nepal.

Can a foreign company own 100% of a private company in Nepal?

In most permitted sectors, yes. FITTA allows full foreign ownership subject to approval.

What is the minimum capital for a foreign private company in Nepal?

Typically NPR 20 million, depending on the industry and investment category.

Can a private company later convert into a public company in Nepal?

Yes. Conversion is legally permitted but requires regulatory approvals and restructuring.

Is a public company mandatory for large investments in Nepal?

No. Size alone does not require a public company unless public fundraising is planned.